4. How to calculate Beta

To calculate Beta, you need return data for both the asset and a relevant benchmark. The goal is to quantify how much the asset's price movements respond to changes in the broader market.

1: Choose asset and benchmark

Pick the asset you want to analyse — for example, a stock, ETF, or mutual fund — and select a benchmark that reflects its market exposure. A US equity fund might be compared to the S&P 500; a global fund might use the MSCI World Index.

2: Collect historical data

Gather price data for both the asset and the benchmark over the same period. Most Beta estimates use daily returns over the past 12 months (≈ 250 data points).

3: Calculate returns

Convert prices into percentage returns using this formula: Return_t = (Price_t − Price_t−1) ÷ Price_t−1

4: Calculate covariance and variance

You can easily do this in Excel or Google Sheets using the formulas:

Covariance: =COVARIANCE.P(A2:A251, B2:B251)
Variance: =VAR.P(B2:B251)

5: Run the calculation

Use the following Beta formula: Beta = Cov(asset, market) ÷ Var(market). Divide the two results to get Beta. Make sure both series are aligned in date and frequency.

OPTIML INSIGHT

Use trusted tools for Beta

You don’t have to calculate Beta from scratch. Sites like offer quick access to published values.

These figures are useful — but not universal. Always check what benchmark and time period were used, especially when comparing funds or building your own models.